Jun 14, 2006. /Lesprom Network/. The commitment of the FED to prioritise the fight against inflation over the measures to support the economic growth has created unrest on the stock markets. Another interest rate hike of 0.25 percentage points is widely expected later this month. Longer term outlook is dimming. US household debt climbed at an annualized rate of 11% during first quarter, fastest growth in over 20 years. In Europe, the interest rates were already increased by 0.25 percentage points to 2.75%. That was an expected response from the ECB after several of the indicators suggested that the inflation was picking up. Also, the European economy continues to expand. In Japan, growth numbers of the first quarter were revised upwards to 0.8%, which in seasonally adjusted annualised terms means an annual growth of 3.1%. Capital investments were one of the key drivers expanding by the same 3.1%. In China, the health of the economy is questioned after the analysis revealed that bad debt are pegged at $600-700 billion. This makes the Chinese banks vulnerable if there is a global or national slowdown. Inflation pressures are growing, held back from the time being by the capacity surpluses. In paper industry, there are very few statistics available over May. Converters, publishers and other end users of paper are trying to push through some of the price increases applied on them by the paper suppliers. In Europe the demand is growing faster and operating rates have been on their way up. Concerns about the availability keep the pulp market firm but resistance against pulp price increases is hard due to persistent weakness in most paper prices. In Europe pulp prices have continued to increase during June. The PIX NBSKP benchmark climbed by $6.53/tonnes, or 1.0%, to $666.49/tonnes. The USD appreciated last week by 1.2% against Euro. This helped the NBSKP index value in Euro to jump up to 526.49 Euro/tonnes, up by 11.50 Euro/tonnes, or 2.2%. The BHKP market has remained stable too. The prices announced for May have widely been accepted but no increases were announced for June. The value of USD increased last week by 1.2% against Euro. Our BHKP index closed at 505.33 Euro/tonnes, up by 7.32 Euro/tonnes, or 1.5%. Converting the index-value into USD brought it to $639.70/tonnes, up by $1.5/tonnes, or 0.24%. For the European newsprint market, the month-long soccer World Championships is said to have its own positive impact on newsprint demand. Changes in the newsprint data were scarce last week. The currency effect on the index was also bordering to nil, and the index remained unchanged from last week at Euro 518.62. In coated mechanical paper grades, some price changes in both directions were reported to us. Euro was practically unchanged against the basket of non-EMU currencies. The downward changes were slightly bigger and more numerous than the upward ones, sending the index south by Euro 2.56 or 0.36% to Euro 701.28. In coated woodfree, changes to paper prices that we received from last week were mostly downward ones. The Euro moved only slightly against the non-EMU basket and had a marginal impact on the index. The downward price changes caused the index to retreat from the previous week’s value. The index moved down by Euro 1.49 or -0.21% to Euro 717.83. In uncoated woodfree grades, cut size prices have lately adjusted upwards, which also showed in our PIX A4 B-copy benchmark. However, the latest price changes reported were in both directions with a slight emphasis on the downward ones. The impact of the currency movements was almost nonexistent. The price changes caused a decline of the index of Euro 1.43 or 0.18%, to Euro 796.79. In the US packaging sector, producers of both containerboard and corrugated boxes are trying to implement price increases. Containerboard operating rates remain high. In Europe, price increase efforts are also under way for containerboards. Last week the Euro did not change much against the basket of the non-EMU currencies. Higher quotes were received for brown Kraftliner, and PIX Kraftliner index jumped by 5.03 Euro/tonnes, or 1.1%, to 473.91 Euro/tonnes. For White-top Kraftliner prices remained largely unchanged and the index ended up losing Euro 0.21/tonnes, or 0.03%, closing at Euro 666.72/tonnes. In the recycled fibre based containerboard grades quotes were either up or unchanged. PIX Testliner 2 benchmark went up by 1.25 Euro/tonnes, or 1.3%, to 378.69 Euro/tonnes. PIX Testliner 3 benchmark gained 1.34 Euro/tonnes, or 0.4%, and closed at 348.54 Euro/tonnes. PIX RB Fluting index went up by 1.61 Euro/tonnes, or 0.5%, ending at Euro 335.66/tonnes.